Report - 2022 02 24 A29905 D244642 Bill Report 1015 S2 E Sbr Bfst Ta 22
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- 2022-02-24
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- 2022 02 24 A29905 D244642 Bill Report 1015 S2 E Sbr Bfst Ta 22
Summary
A Senate Bill Report on E2SHB 1015, the Washington equitable access to credit act, as of February 17, 2022, prepared by non-partisan staff of the Senate Committee on Business, Financial Services & Trade. It records that the bill passed the House on 1/21/22, 97-0. The report states that the bill directs the Department of Commerce to create the Equitable Access to Credit Program, which awards grants to qualified lending institutions funded by a B&O tax credit capped at $1 million per person and $8 million per calendar year. It describes limits on grants, including at least 65 percent to native CDFIs or low-density counties and no more than 25 percent to the same recipient, along with matching fund requirements and ranking criteria. The report states that the program expires on July 1, 2031 and closes with a staff summary of supporting public testimony.
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“Report - 2022 02 24 A29905 D244642 Bill Report 1015 S2 E Sbr Bfst Ta 22.”
Original at app.leg.wa.gov, dated 2022-02-24. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2022-02-24-2022-02-24-a29905-d244642-bill-report-1015-s2-e-sbr-bfst-ta-22/
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SENATE BILL REPORT
E2SHB 1015
As of February 17, 2022
Title: An act relating to creating the Washington equitable access to credit act.
Brief Description: Creating the Washington equitable access to credit act.
Sponsors: House Committee on Finance (originally sponsored by Representatives Maycumber,
Chapman, Tharinger, Graham, Santos and Macri).
Brief History: Passed House: 1/21/22, 97-0.
Committee Activity: Business, Financial Services & Trade: 3/23/21, 3/25/21 [DPA-WM];
2/17/22.
Brief Summary of Bill
• Creates the Equitable Access to Credit Program to fund grants through
the Department of Commerce to certain community development
financial institutions (CDFI) to provide loans to historically underserved
communities during the 2021-23 biennium.
• Provides at least 65 percent of the grant funds awarded each calendar
year to native CDFIs, or for grantees to provide services or invest in
counties that have fewer than 100 persons per square mile, or have an
area of less than 225 square miles.
• Restricts no more than 25 percent of all grants awarded in any calendar
year from being awarded to the same CDFI.
SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE
Staff: Clinton McCarthy (786-7319)
Background: Community Development Financial Institutions. A community development
financial institution (CDFI) is a specialized financial institution certified by the United
This analysis was prepared by non-partisan legislative staff for the use of legislative
members in their deliberations. This analysis is not part of the legislation nor does it
constitute a statement of legislative intent.
Senate Bill Report -1- E2SHB 1015
States Department of the Treasury (Treasury) to provide loans for community development
purposes. CDFIs work in economically distressed markets underserved by traditional
financial institutions and provide financial products such as mortgage financing for low-
income homebuyers and not-for-profit developers, flexible underwriting and risk capital for
community facilities, and technical assistance and commercial loans to small businesses in
low-income areas. The Treasury offers competitive financial and technical assistance
awards to assist certified CDFIs offering these financial products. An emerging CDFI may
apply for a technical assistance award if it can demonstrate the ability to become a certified
CDFI within three years. CDFIs include institutions such as community development
banks, credit unions, and venture capital funds. As of December 2020, 29 certified CDFIs
were operating in Washington.
In 2021, CDFI's received $1.25 billion in federal funding authorized by the Coronavirus
Response and Relief Supplemental Appropriations Act of 2021 to assist communities
responding to economic hardships created by the COVID-19 pandemic.
The Department of Commerce (Commerce) selected three CDFI partners to run the Early
Learning Facilities loan program.
Summary of Bill: Commerce is directed to create and operate the Equitable Access to
Credit Program (program). The purpose of the program is to award grants to qualified
lending institutions (QLIs) to provide access to credit for historically underserved
communities. The grants are funded by a business and occupation (B&O) tax credit.
Funding the Equitable Access to Credit Program. To fund the program, a tax credit against
the B&O tax for contributions made to the equitable access to credit program is created. No
person may claim more than $1 million of credit in any calendar year, including credit
carried over from the previous calendar year, and no refunds may be granted for unused
credits. The maximum amount of tax credits in a calendar year may not exceed $8 million,
and the Department of Revenue must inform Commerce once this limit is met. Credits are
available on a "first-in-time" basis.
To claim the credit, a person must file with the Department of Revenue, in a format
approved by the Department of Revenue. No credits may be earned on contributions that
occur after June 30, 2031.
Limitation on Disbursements by the Department of Commerce to Qualified Lending
Institutions. No more than 25 percent of all grants awarded in any calendar year may be
awarded to the same grant recipient. At least 65 percent of the grant funds awarded each
calendar year must be provided to native CDFIs, or for grantees to provide services or
invest in counties that have fewer than 100 persons per square mile or have an area of less
than 225 square miles. Up to 20 percent of each grant award may be used by the grant
recipient to fund a loan loss reserve, technical assistance, and small business training
programs.
Senate Bill Report -2- E2SHB 1015
Beginning in fiscal year 2022, up to 5 percent may be used for agency staffing and
administrative costs related to implementing this act. If the program is not fully funded in a
given year, the limit on administrative costs may be increased to 10 percent.
Member Appointments to an Advisory Board to Rank Grant Applications. Commerce must
appoint members to an advisory board that will assist in ranking grant applications.
Commerce must seek to achieve a fair geographic balance of committee members and is
encouraged to seek representation from members with relevant expertise, including the
following: representatives of the banking industry who are familiar with CDFIs; economic
development professionals who have experience in rural development; representatives of
local government; and representatives of federally recognized Indian tribes.
Commerce may include additional criteria it deems helpful in achieving the goal of ensuring
access to credit to underserved communities across the state.
Criteria for Qualified Lending Institution Status. Grants from Commerce must be made to
QLIs under the program. A QLI must be:
• recognized by the Treasury as an emerging or certified CDFI;
• registered as a nonprofit organization exempt from taxation under the Internal
Revenue Code; and
• able to demonstrate a history of lending in Washington.
A QLI must provide the following grant matching funds:
• at least 20 percent if recognized as an emerging CDFI;
• at least 50 percent if recognized as a certified CDFI with assets of fewer than $3
million; or
• 100 percent if recognized as a certified CDFI with assets of at least $3 million.
Member Appointments to an Advisory Board to Rank Grant Applications. Commerce must
appoint members to an advisory board that will assist in ranking grant applications.
Commerce must seek to achieve a fair geographic balance of committee members and is
encouraged to seek representation from members with relevant expertise, including the
following: representatives of the banking industry who are familiar with CDFIs; economic
development professionals who have experience in rural development; representatives of
local government; and representatives of federally recognized Indian tribes.
Commerce may include additional criteria it deems helpful in achieving the goal of ensuring
access to credit to underserved communities across the state.
When ranking grant applications, the following criteria must be considered:
• the number and total value of loans and investments closed during the previous five-
year period by the QLI in Washington and the percentage of those loans and
investments that went to historically underserved communities;
Senate Bill Report -3- E2SHB 1015
• funds leveraged by the proposed grant award;
• projected loan or investment production with the award over the performance period
of the grant;
• how the award supports the growth of the QLI;
• past performance of loans and investments made by the QLI; and
• awards to a diversity of QLIs.
When a loan or investment of funds from the Program is repaid to a QLI, the QLI must
offer the repaid funds as new loans or investments consistent with the terms of the program
for ten years from the date of the grant award.
Program Administration—Permitted Use of Funds From the Account. Up to 5 percent of
the program revenues may be used for staffing and administrative costs incurred by state
agencies for implementation of the program. Beginning in 2021, Commerce must submit
an annual report to the Legislature that contains the following information:
• the list of grant applicants, total value of grants requested, and the location of each
applicant;
• the list of grant recipients, total amount of awards, and required match amounts; and
• aggregated information on loans and investments provided by the QLIs receiving
grants.
Commerce may contract for all or part of the program's administration.
Expiration Date. The program expires on July 1, 2031.
Appropriation: None.
Fiscal Note: Available.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: Ninety days after adjournment of session in which bill is passed.
Staff Summary of Public Testimony (Regular Session 2022): PRO: This bill is a result
of years of hard work with stakeholders. This is business helping businesses get off the
ground. Why not go to banks? CDFI's fill the gaps and help serve the underserved. This
bill is an important step to supporting rural economic development. CDFI's are often the
first place that people use to start the process of rebuilding their credit. CDFIs in general
have higher interest rates than banks or credit unions for small business lending. Typically
a small business loan is prime plus 3 to 4 percent. For CDFIs tend to be 2 to 3 percent
above those rates. Washington can significantly invest in economic development and focus
on communities that are underserved and have disadvantages that other parts of the state
does not have. CDFIs often offer businesses a lifeline so that they can qualify for
traditional banking options in the future. This is a long term need, and a long term financial
Senate Bill Report -4- E2SHB 1015
solution will help address this issue over a period of time. During COVID19, 40 percent of
black and brown owned businesses were shuttered.
Persons Testifying: PRO: Representative Jacquelin Maycumber, Prime Sponsor; Michael
Moran, Confederated Tribes of the Colville Reservation; Emerson Sekins, Northwest
Access Fund; Joe Sky-Tucker, Business Impact NW; Bruce Brooks, Craft3; Beto Yarce,
Ventures; Mackenzie Chase, Seattle Metropolitan Chamber of Commerce; Tommy Gantz,
Association of Washington Business; Paula Sardinas, WA Build-Back Black Alliance
(WBBA).
Persons Signed In To Testify But Not Testifying: No one.
Senate Bill Report -5- E2SHB 1015
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